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Monday, August 30, 2004

Indiana Law - Another indictment of an Indiana quasi-public entity

Michele McNeil Solida of the Indianapolis Star reports today, in a front-page story headlined "Largely unseen, bureaucrat spent thousands on self," that:

A state school technology official who oversaw a million-dollar budget spent thousands of it on himself with little or no oversight from anyone else, a review by The Indianapolis Star found.

While director of the Indiana Web Academy, the state's school Internet program, Kenneth R. Scales authorized payments of at least $316,000 to a nonprofit company that he also ran. He then signed those official state checks, sometimes cashing them himself, according to copies of canceled ones.

Here is what particularly caught my eye:
Scales' conduct at the academy highlights significant problems with checks and balances at Indiana's Intelenet Commission, which oversaw Scales and the work going on at the academy.

The Intelenet Commission was created by the General Assembly in 1986 to start and operate a statewide telecommunications network for public agencies and libraries. It doesn't fall under many of the controls of state government because it's a quasi-public agency. It has its own personnel rules. It handles its own bills and check-writing instead of using the state auditor's office.

Nobody in the governor's office directly controls Intelenet, although the governor hires the executive director and appoints five of the 16 members of the commission's board. The commission, like the state's other quasi-public agencies, operates free from many government rules, so it can get things done much faster. And the commission, which managed $49 million last year, didn't have many of its own controls in place.

There was no policy for criminal background checks, no policy to regulate what expenses employees could get reimbursed and little training in government ethics. The policy on tuition reimbursement wasn't enforced. * * *

The office of Gov. Joe Kernan is involved, too. Kernan's chief attorney, Jon Laramore, will be overseeing an audit of the commission, to be conducted by the same auditor who helped uncover and fix problems at the Public Employees' Retirement Fund, another quasi-public agency. [emphasis added]

I have written several times in the Indiana Law Blog about the 2003 Indiana Economic Development Corporation law (IEDC), most recently here, in an entry titled "Economic Development and the Indiana Governor". To quote from that entry:
(4) The 2003 IEDC law, as now amended, may not be the optimal way to meet the general assembly's purpose:
The 2003 IEDC law was enacted because of dissatisfaction with the State’s progress in the economic arena. Creating a new entity to develop and execute statewide economic policy, “removed from the existing state bureaucracy and shielded from partisan political control” was the approach selected by the 2003 general assembly in order “to bring a new level of professionalism and sophistication to Indiana’s economic development activities. Oversight of the organization [is to] be provided by a twenty-three member, bi-partisan board designed on the principle of building a strategic alliance between the public, private, and academic realms.”
Phrased another way, the law moved the economic development responsibility away from the elected governor, and away from state government as constitutionally structured, and gave it to a quasi-public authority, dissolving any direct lines of authority to the voter. Now that, through the efforts of the 2004 general assembly, the governor's appointment authority has been reinstated, perhaps the modifications could be completed by placing the department of commerce directly under the responsibility of the governor, as Tucker requires.
The internal quote is to my 2003 paper, "Maintaining the Balance of Power Between the Legislative and Executive Branches of Indiana State Government, Post 1941," available here.

Posted by Marcia Oddi on August 30, 2004 12:13 PM
Posted to Indiana Law